Difference Between Covenant and Contract

Covenant vs Contract
 

The difference between Covenant and Contract is not identifiable at the first glance. Indeed, given that both terms are loosely interpreted as a promise between two or more persons, the distinction between the two becomes more ambiguous. The term contract is not an uncommon word and we have all heard its usage in day-to-day conversations. Covenant, however, is less familiar. The key to understanding the difference between the terms lies in closely examining their definitions. It is only then that the distinction becomes evident.

What is a Covenant?

A covenant is defined as an agreement or written promise between two or more parties that constitutes a pledge to do or refrain from doing something. Thus, an agreement that requires the performance of some act is termed an “affirmative covenant” while an agreement that restricts or refrains a person from performing something is called a “negative covenant.” In other words, a covenant is a type of contract and falls within the purview of contracts in general. The person making the pledge or promise is called the covenantor while the person to whom such promise is made is known as the covenantee. In addition, covenants are also included in a contract, thereby forming part of the contract. In certain instances, it may constitute a particular condition in a contract. For example, covenants or pledges are included in contracts of sale or deeds of real property.

The nature of a covenant may take several forms: it may be a mutual covenant wherein both parties agree to perform something at the same time; it may be a dependent covenant or even an independent covenant. In law, however, the concept of a covenant is frequently heard and used with respect to real property, particularly pertaining to land and the use of land. These are also known as real covenants. Real covenants are conditions attached to the deed of a property. Such covenants are further divided into several categories, namely, covenants running with the land and covenants for title. Covenants running with the land typically restrict or stipulate the use of the land. Thus, for example, the covenant will state that the person owns the land subject to the restriction that the land is only to be used for agricultural purposes. Covenants for title typically provide the new owner of the land certain protection measures or benefits. These Covenants include a covenant for seisin, covenant of the right to convey, covenant against encumbrances, covenant for quiet enjoyment, covenant of warranty, and others. Collectively, such covenants ensure that the person in possession or ownership of the land enjoys quiet possession and is protected from outside claims, rights, or any other burdens.

What is a Contract?

In simple terms, a contract is an oral or written promise that is enforceable by law. It is defined in law as a voluntary agreement between two or more parties, who intend to create legal obligations, in which there is a promise to do or perform some work or service for a valuable consideration or benefit. A contract is a common phenomenon. It is frequently used in dealings between businesses, corporations, banks, owners of land, and other transactions. Of course, a written or oral promise between two parties to perform something is not sufficient to constitute a legal contract. For a contract to be valid in law, it must incorporate certain elements: firstly, there must be an offer and an acceptance of that offer; secondly, there must be an intention to create legal relations between the parties; the agreement must be made for a valuable consideration such as payment; the parties must have legal capacity to enter into the contract and the object or subject matter of the contract must be legal.

Contracts may take various forms and the structure of contracts depends on the nature of the contract and the parties. Examples of a contract include an agreement to provide a service, or an agreement to exchange certain goods.

What is the difference between Covenant and Contract?

The difference between covenant and contract is thus evident. A contract represents a broad area in that it refers to a legally binding agreement or promise made between two or more parties, while covenant constitutes a type of contract.

• Definition of Covenant and Contract:

• A Covenant is an agreement or written promise between two or more parties that constitutes a pledge to do or refrain from doing something. It is, thus, a type of contract and in some instances may form part of the contract itself.

• A contract is a voluntary agreement between two or more parties, who intend to create legal obligations, in which there is a promise to do or perform some work or service for a valuable consideration or benefit. It is enforceable by law.

• Concept of Covenant and Contract:

• A covenant may be a mutual covenant wherein both parties agree to perform something at the same time, or it may be a dependent covenant, or an independent covenant.

• A contract must contain certain elements in order to be enforceable by law.

– there must be an offer and an acceptance of that offer,

– there must be an intention to create legal relations between the parties,

– the agreement must be made for a valuable consideration such as payment,

– the parties must have capacity to contract,

– the subject matter of the contract must be legal.

• Examples of Covenant and Contract:

• Examples of covenants include mutual covenants, restrictive covenants, covenant against encumbrances, covenant for quiet enjoyment and others.

• Examples of a contract include an agreement to provide a service, or an agreement to exchange certain goods.

 

Images Courtesy:

1. Ulster Covenant, 1912 via Wikicommons (Public Domain)
2. Contract by Sarah-Rose (CC BY-ND 2.0)